Safe Withdrawal Rate (4% Rule)

Personal Finance
Updated Apr 2026 • Has calculator

The annual percentage of a retirement portfolio you can withdraw without depleting it over 30 years.

What is Safe Withdrawal Rate?

The safe withdrawal rate (SWR) is the percentage of a retirement portfolio that can be withdrawn annually, adjusted for inflation each year, with a high probability of the portfolio lasting 30 years. Financial planner William Bengen's 1994 study of US historical returns found that a 4% initial withdrawal rate—applied to a 50/50 stock and bond portfolio—never depleted a portfolio over any rolling 30-year period from 1926 to 1992. This became the widely cited '4% Rule.' More conservative estimates suggest 3.3–3.5% for longer retirement horizons.

Formula

Annual Withdrawal = Portfolio Value × (Withdrawal Rate ÷ 100)

Worked Example

Worked example — Retiree with $1.2M portfolio — 2024

2024

Step 1  Retirement portfolio: $1,200,000 (60% stocks / 40% bonds)
Step 2  Safe withdrawal rate: 4.0% (Bengen 1994 historical study)
Step 3  Annual withdrawal = $1,200,000 × 4.0% = $48,000/year
Step 4  Monthly income from portfolio: $4,000/mo
Step 5  → Increase by inflation each year (e.g. 3%)

Source: Bengen, W.P. — Determining Withdrawal Rates Using Historical Data, JAPR 1994 (1994-10-01)

Calculate Safe Withdrawal Rate

Total investable retirement assets at retirement date

Annual withdrawal as % of initial portfolio (4% = classic rule)

Annual Withdrawal

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Not investment advice.

How to Interpret Safe Withdrawal Rate

< 20000
Low — supplement needed (Social Security, part-time work)
20000 – 48000
Moderate — covers basics; frugal retirement lifestyle
48000 – 100000
Comfortable — covers average US retirement expenses
> 100000
Ample — well above average US retirement spending

📚 FIRE Planning — Complete the path

  1. FIRE Number
  2. Safe Withdrawal Rate
  3. Coast FIRE
  4. CAGR
  5. Rule of 72
Sources
  1. Bengen, W.P. — Determining Withdrawal Rates Using Historical Data, JAPR 1994
  2. Investopedia — 4% Rule